To disclose the budget or not in an RFP

[Amy Perlmutter]

As many of you know, I spent half of my career working in government recycling and waste programs. In that capacity, I wrote probably hundreds of RFPs.  When I was first starting out, it was the policy of the government I worked for to not disclose the available budget in the RFP.  They felt, as many incorrectly do, that they would be giving money away if they could get something cheaper.  When I moved to my next job, it was the policy there to disclose the budget.  And that worked so much better.  Bidders would know what they were aiming for in developing a proposal, they could still come in under budget and be competitive that way. It allowed us to better compare proposals and it allowed bidders to not waste their time aiming for a target that was unknown. 

In my capacity as a consultant, I am surprised at the number of RFPs I see that do not disclose the budget. I have stopped bidding on those and I know many other consultants who have stopped as well.   In my experience, Scopes of Work in RFPs are often wish lists and clients don’t have the money budgeted for a consultant to truly follow the letter of the SOW— they will probably more likely come in over your budget than below.  So from a client perspective, you are potentially missing out on good proposals if you don’t disclose,  you may be throwing out good proposals because they are more than you want to spend (because the bidder had to guess what you wanted), you may need to rebid because you don’t get enough proposals, or you may have to spend valuable time negotiating with proposers for a change in scope to get to your budget. As a consultant, I know how very much work goes in to thinking about a proposal and putting it together.  It’s in everyone’s interest to disclose the amount available. You can say: we want you to do a waste composition study, but if you only have X amount of money, we’d propose it one way, and if you have Y, we’d propose it another. But in a SOW in an RFP, they probably look the same. Disclosing the budget helps consultants know how to balance the tasks we will do for you and how in depth (or not) to go to. 

I recently was advising a nonprofit that was searching for a consultant and they refused to disclose.  I wondered if there were any useful article on this topic and found this one.  I hope that those of you writing RFPs take a close look, and for other consultants, maybe it will help you encourage clients to disclose!

https://center4procurement.org/wp-content/uploads/2024/03/230627-The-Budget-To-Share-or-Not-to-Share.pdf

Worcester, MA recently released an RFP with an impressive scope of work but without the budget, and several consultants I have spoken with are deciding whether or not to submit a proposal because of the lack of budget disclosure. 

Amy

__________________________________

Amy Perlmutter

Perlmutter Associates

NEW ADDRESS!

113 Richdale Ave #35 
Cambridge, MA 02140

www.aperlmutter.com

Linked In: https://www.linkedin.com/in/amy-perlmutter-217a463/

[Jonathan Levy]

Amy,

I appreciate your perspective on this. I have experienced first-hand overbidding a project by triple the client's budget, which was not disclosed. It was a rude awakening for them, as they wanted way more than they had allocated. On the flip side, I've been on a team they ended up not proposing because we felt it would take twice the budget, which was disclosed, to meet the requirements of the scope. In that case we actually wrote a letter to the requesting agency informing them why we didn't' propose. Is it turned out, no one responded, and they ended up re-configuring the scope and budget to something more feasible.